In the past we have covered Making Tax Digital (MTD) extensively on our blog, and following the success of MTD for VAT, HMRC are working towards the next step on their plan, MTD for Income Tax & Self-Assessment (MTD for ITSA).
So, what does MTD for ITSA actually involve? Individuals who are subject to income tax on the profits of their sole trader or property business will be required to keep their accounting records electronically (either using suitable software or on spreadsheet) and file quarterly returns to HMRC with details of their income and expenditure together with any other information that HMRC specifies.
In a statement issued on 23rd September 2021, the Government confirmed that MTD for ITSA will be introduced from April 2024 onwards, and will affect individuals who fall within the criteria and have gross income from these sources over £10,000. MTD for ITSA is not optional if you fall within its scope – you cannot simply choose not to take part.
Currently it is unclear when you will be able to apply for the scheme, but keep your eyes out to avoid stress as the deadline approaches. In the meantime, get yourself set up on a cloud-based accounting software as soon as you can. This will help you avoid the admin overload when the launch date comes, iron out the kinks and get to know how the software works in plenty of time before the start of MTD for ITSA!
Before migrating your bookkeeping on to the cloud, it is best to get up to date with your records and Self-Assessment Returns, and there is no time like the present! The deadline for the Self-Assessment Return for the Year Ending 5th April 2021 is fast approaching.
You need to ensure you have submitted your return online by 31st January 2022, or if you submit by paper, by the 31st October 2021. If you leave your Self-Assessment Return until the last few days in January then you run the risk of receiving an unexpected high tax bill, with no time or savings to pay HMRC.
Nobody wants tax deadlines and payments to be looming in the background over the festive period, and panicking to gather PDF documents, report and certificates as you bring in the new year. Remember, a Self-Assessment Return isn’t purely for the self employed, you need to complete a return if you:
- Are a director of a limited company
- Receive income from renting out a property
- Have earnings relating to your savings, investments and dividends
- Receive income from foreign sources
- Earn tips or commission payments
You may have all of this in hand, but allow us to take the burden from you and complete this on your behalf. We might be able to help you claim certain tax reliefs you have not previously considered, and reduce your tax bill!
Get in touch today to get the ball rolling and have your tax affairs well in hand so you can kick back, relax and enjoy the festive season.